Best retirement plan alternative?

I can’t afford to be a risk taker any more”

Worried Senior

…says 75-year-old Margie Alford of Austin, Texas.  Yet, Margie’s financial planner is moving her CD money into stocks instead, after fruitlessly waiting for three years for interest rates to rise.

Worried Senior

Low interest rates of the past several years have taken a toll on U.S. savers.  “The Fed has removed the last shred of possibility that interest rates will revert to normal in the near future,” according to Christopher Carroll, profession at Johns Hopkins University.1

As a result, retirees are taking on more risk… at a time they can least afford to.

With interest rates on CD’s, saving and money market accounts not even keeping up with inflation, what other options do you have?

The Bank On Yourself solution…

[Read more…] “Best retirement plan alternative?”

The Ultimate Wealth-Building and Retirement Strategy… Whether the Market Goes Up, Down or Sideways

Have you been disappointed by your 401(k), IRA or other retirement plan?  Conventional wisdom tells us these plans are the best way to save and invest for retirement. Yet following this advice has resulted in financial insecurity for most Americans.

Because of this, most baby boomers have been forced to postpone retirement an average of five years.1

I’m often asked how using the Bank On Yourself method to save for retirement compares to traditional plans, so I put together this short video that reveals seven reasons Bank On Yourself makes an excellent retirement plan alternative.

Click the play button in the video below and see how many of these seven advantages you’d like to have in your financial plan…

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The Ultimate Wealth-Building and Retirement Strategy… Whether the Market Goes Up, Down or Sideways

Would you like to find out how big your nest-egg could grow – guaranteed – if you added Bank On Yourself to your financial plan? No two plans are alike – yours would be custom-tailored to your unique situation, goals and dreams. To find out what your bottom-line numbers would be, request a FREE, no-obligation Analysis today.
REQUEST YOUR
FREE ANALYSIS!

If you’re wondering where you’ll find the money to fund your plan, keep in mind the Bank On Yourself Professionals are masters at helping people restructure their finances to free up money to fund a plan. Here are the eight most common places they look.

When you request your FREE Analysis, you’ll get a referral to one of only 200 financial representatives who have met the rigorous training and requirements to be a Bank On Yourself Professional. They’ll show you why Bank On Yourself is the ultimate wealth-building and retirement strategy… whether the market goes up, down or sideways.

1.  Bankers Life and Casualty Center for a Secure Retirement, May 2011

How to become your own source of financing

Updated November, 2019

In a Nutshell: By using a little-known form of high cash value, dividend-paying whole life insurance, you can essentially be your own “bank” — your own source of financing — instead of relying on traditional lending institutions.

What if you could bypass banks, finance and credit card companies altogether and become your own source of financing?

It’s easier to do than you might think and hundreds of thousands of people are already doing it!

To show you how to become your own “bank” — your own financing source — we’ve created a fast-paced video. This video reveals . . .

  • A way to make major purchases that beats financing, leasing or even paying cash for them!
  • How the Bank On Yourself method lets you use your money to buy things…  but still have it earning interest and dividends for you
  • Six ways this method beats using traditional financing
  • How famous people like Walt Disney and J.C. Penney used this method – when no banker would lend them a dime
  • How the average family can add $500,000 – or more – to the their lifetime wealth, simply by running their car and vacation purchases through a Bank On Yourself plan

Click the play button below to watch the video…

FBqM_kW3Nk8

Would you like to find out how much more wealth you could have when you become your own source of financing?

No two Bank On Yourself plans are alike. Each is custom tailored to your unique situation, goals and dreams. To find out what your bottom-line, guaranteed numbers and results would be if you added Bank On Yourself to your financial plan, request a free, no-obligation Analysis today, if you haven’t already done so.
REQUEST YOUR
FREE ANALYSIS!

If you’re wondering where you’ll find the money to fund your plan, keep in mind the Bank On Yourself Professionals are masters at helping people restructure their finances to free up money to fund a plan. Here are the eight most common places they look.

Here’s another video you may be interested in…

Would you like to see a specific example showing how much guaranteed and predictable income you could have in retirement, using the Bank On Yourself method?

Click the play button in the video below to see a fascinating example:

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Money and Investing IQ Contest Results

The results of our “Test Your Money and Investing IQ” blog contest are in – once again proving that we have a lot of smart subscribers!

But some of these questions about key money and finance basics tripped up some of our readers – almost no one got all five answers right. Making financial decisions without knowing the correct answer to even one of these questions can easily shave six figures or more off your lifetime wealth.

So I urge you to pay close attention to the correct answers below. You’ll also find a list of our six contest winners at the end of this post.

Here are the correct answers given by readers to the five questions…

Question #1: If you finance a $30,000 car through a finance company, your actual cost for the car is the money you spend on it, plus the interest you pay, less the value of your trade-in at the end of your loan repayment period.

If you pay cash for a car, what’s your actual cost for the car?

Finance major purchases like cars through Bank on Yourself method to save and make money
Finance major purchases like cars through Bank on Yourself method to save and make money

Answer: Joe Goldsmith pointed out what many people with alphabet soup after their name don’t get – that “paying cash for the car is just another form of financing.”

John Nicholson summed it up succinctly: “If you pay $30,000 cash for a car, your actual cost is the money you spent on the car, less the trade-in value at the end of the period, plus the opportunity cost – the loss of interest that the $30,000 could have earned.”

Perry Blouin went on to calculate the enormity of the total loss you could have over 40 years because of this “opportunity cost.” And Valerie Coffman noted, “If you use a Bank On Yourself policy (to pay for the car), you make money as if you never took it out, and you make money on yourself when you pay it back. Awesome!”

As Eric pointed out, “with Bank On Yourself, you accumulate the $30,000 and when it comes time for your vehicle purchase, request a check from the insurance company, receive it within 48-72 hours and then be ready to negotiate with the car dealership.”

Using your Bank On Yourself policy to pay for major purchases also gives you access to money on your terms rather than someone else’s. You can pay it back on your own schedule without worrying about bill collectors, late fees or black marks on your credit report. It beats financing, leasing or even directly paying cash for things by a long shot.

To find out how much more lifetime wealth you could enjoy – simply by using the Bank On Yourself method to make major purchases versus the other options available to you, request a FREE no-obligation Analysis that will show you your bottom-line results. I think you’ll be amazed!

Unlike stock marketing, Bank on Yourself method does not rely on sale of asset to deliver profits

Question #2: If you have a $20 stock and it goes up by 40%, how much money did you make on that stock? (Hint: This is about a key financial principle, not a math question.)

Unlike stock marketing, Bank on Yourself method does not rely on sale of asset to deliver profits

Answer: The talking heads on Wall Street NEVER get this one and do their best to make sure you don’t figure out the blindingly obvious answer to this question!

As Ruth noted,

You don’t make any money until you actually sell your stock.”

Likewise, it makes me crazy when people talk about how much value their home has lost since the real estate bubble burst. You don’t have a REAL gain (or loss) until you sell an asset and lock your profits in.

Which is in stark contrast to the Bank On Yourself method. The gains you receive each year (guaranteed and predictable) are locked in the moment they’re credited to your policy. As for losses… well, there aren’t any. This is based on an asset class that has increased in value every year for over 160 years!

Question #3: According to Morningstar, Inc., the top-performing mutual fund for the last decade (ending December 31, 2009) enjoyed an 18% annual return.

However, the typical investor in that fund wasn’t so fortunate.

What was the annual return of the typical investor in that top-performing fund? And why was their return so different from the return reported by the fund?

Answer: Only one person – Raymond Trembath – nailed the shocking correct answer to this question (no one else came even close), and he also noted the reasons why:

“The typical investor in the best performing mutual fund of the last decade lost 11% annually, even though the fund itself rose by more than 18% annually. The reason this could happen is that all mutual funds are legally allowed only to advertise the results of their ‘buy and hold’ investors, in spite of the fact that long-term mutual funds tend to be held for less than half a decade!”

Doesn’t this typify the smoke and mirrors that the Wall Street Casino uses to pull the wool over our eyes?

If you find it hard to believe that the results mutual funds report could be so different than the results the investors in those funds get, I urge you to read the article supporting this from the Wall Street Journal.

The ultimate financial security blanket

Did you know that the Bank On Yourself wealth-building method has NEVER had a losing year? Used by Walt Disney and J.C. Penney, it has stood the test of time for more than 160 years.

To find out how you can grow your nest-egg safely and predictably, even when stocks real estate and other investments tumble… and how much money you could have – GUARANTEED – on the day you plan to retire, request your FREE no-obligation Analysis and Recommendations now.

You’ll also get a referral to a Bank On Yourself Professional who can help you find money you didn’t know you had to fund your plan.

 mutual funds and investment experts are human too and sometimes make mistakes

Question #4: What percentage of mutual funds, financial representatives and investment advisory services underperform the overall market? And why?

 mutual funds and investment experts are human too and sometimes make mistakes

Answer: Nick H. hit this one spot on when he said, “80% per Hulbert Financial Digest.”

And it’s not just because of the fees they charge. It’s because all the “experts” are humans, too, and are “predictably irrational,” buying and selling at the wrong times.

Question #5: You could have $10,000 in a mutual fund that reports an average annual return of 25% for four years… and at the end of the fourth year end up with only the $10,000 you started with.

How is that possible?

Answer: Doc Youngblood’s little story was such a great, entertaining explanation of this, I decided to include his response in full:

“How is it possible to have $10,000 in a mutual fund that reports an average annual return of 25% for four years… and at the end of the fourth year you end up with only the $10,000 you started with?

The key to the question’s answer is hidden in this short, simple story, but hidden in plain sight for those willing to see.

And the story? You’ll like this I promise—no animals were hurt during its filming.

rubber duck in a sea of cash

Imagine we are duck hunting and I shoot. I miss by a foot behind the duck. So I quickly aim and shoot again. I miss by a foot in front of the duck.

rubber duck in a sea of cash

By the law of averages, I hit a bulls eye. By the law of dinner, my plate is still empty.

So, if your mutual fund reports an average annual return of 25% for four years, does that mean you’ve got more money in your account?

Let’s play:

Year One: Year Two: Year Three: Year Four:
Starting balance: $10,000 Starting balance: $20,000 Starting balance: $10,000 Starting balance: $20,000
Change: +100% Change: -50% Change: +100% Change: -50%
Ending Balance: $20,000
(woo-hoo!)
Ending Balance: $10,000
(ah well, at least I didn’t lose my initial investment)
Ending Balance: $20,000
(hmm. . .it’s like déjà vu)
Ending Balance: $10,000
(can anyone say, “spinning my wheels”?)

Four years later you still have a $10,000 balance. But not once did the rate of return equal 25%. Here’s the percent change for each year: 100-50+100-50. So we add that up (100%) and then we divide that by four years to show our average rate of return is 25% for four years.

investor hiding from reality

Wait! A 25% average rate of return is supposed to be a great thing, right?

Follow the cash in the example above—did the cash increase? The numbers above show one scenario with a 25% average rate of return and ending up with exactly the same money you started with.

investor hiding from reality

However, 25% annual compound interest is a great thing. Take a look:

Year One: $10,000 becomes $12,500 at 25% compound interest.
Year Two: $12,500 becomes $15,625
Year Three: $15,625 becomes $19,531.25
Year Four: $19,531.25 becomes $24,414.06

Were you like me and confused about the two definitions? It’s very common to confuse them AND to assume that the average rate of return is a linear type of activity, one year after the next being the same. Average rate of return and compound interest are not the same.”

(For the record, you’ll find no smoke and mirrors when you see the bottom line numbers and results you could get when you add Bank On Yourself to your financial plan.)

Now for the list of our six contest winners…

There were so many insightful answers that it was hard to pick out only six winners. (All are being notified by email.)

The best entry, picked by our Bank On Yourself team, is Doc Youngblood, who wins a $100 Amazon Gift Card! (Doc – I guess you can tell your wife she was right!)

And the two runners up, who’ll get their choice of a $25 Dining Gift Certificate or a personally autographed copy of my best-selling book are:

1. Eric

2. Raymond Trembath

k on Yourself Test Your Money and Investment IQ contest winners and their prizes

There were also three winners who got at least one question right, who were randomly chosen to win prizes. The winner of the second $100 Amazon Gift Card is Robert N.

k on Yourself Test Your Money and Investment IQ contest winners and their prizes

And the two randomly chosen winners who’ll get their choice of a $25 Dining Gift Certificate or a personally autographed copy of my book are:

1. Carl Schoner

2. Rita

Thanks to everyone who participated in this blog contest. You are all winners for thinking – and seeing – through the conventional wisdom about money and finances that has cost so many people so much in lost money, lost time and broken dreams.

Bank On Yourself Dividend Paying Life Insurance vs Savings Account

We received dozens of insightful entries for our “Bank On Yourself vs. savings account” contest.  They confirmed – once again – that we have a whole bunch of very smart subscribers!

The contest even inspired one reader to write a poem!

I’ve been studying these topics full time for nearly a decade now, and even I learned some new things.  So, whether you use the Bank On Yourself method or not, or you consider yourself to be an expert or a novice at understanding money and finances, you should read this!

You will undoubtedly learn some things you didn’t already know!

There were so many great contest entries, it was really tough for our team to single out only the five best entries, and the winners of the iPod Touch, Amazon.com gift certificate and more are listed below.

The contest question was:  How is dividend-paying whole life insurance different from a savings account, besides the death benefit?

Our readers gave a dozen or so distinct, key differences between the two, and I’ll summarize a number of them in a moment.

However, I think one really critical advantage of a dividend-paying whole life policy wasn’t mentioned…

Many retirees today can’t stomach the volatility or unpredictability of investing in stocks and other traditional investments and were counting on their interest income from CD’s, money markets and savings accounts.
[Read more…] “Bank On Yourself Dividend Paying Life Insurance vs Savings Account”

Is Bank On Yourself a scam? (Part two)

We received several hundred correct entries to last week’s blog contest and the five randomly picked winners are listed below, along with the details of a NEW contest I’m holding.

Contest Prizes
Enter below to win these prizes!

You could win an iPod Touch, $100 Amazon.com gift certificate, a $25 dining Certificate and more!

In case you missed last week’s contest, I had posted a podcast discussing some of the internet forums where people anonymously debate the merits of Bank On Yourself and discuss whether or not it’s a scam.

Contest Prizes
Enter below to win these prizes!

On one of those threads that comes up very high in the search results, one of my toughest, potty-mouthed critics has slowly come around and admitted I’m right about many of the points I’ve been making.

When challenged by another poster about the actual returns people get in the stock market, he dragged out 29 years of records of his own investing accounts, and was shocked to discover what his returns had actually been.

The contest was simple to enter – just listen to the podcast where I revealed what my critic discovered was his actual annual rate of return BEFORE accounting for inflation and taxes… and then tell us what the percentage was.

Not a Scam

Since the contest has ended, I can reveal the answer now.  My critic averaged a 4.5% annual return over the past nearly three decades of investing in the stock market.

That’s BEFORE accounting for inflation, which averaged more than 3% per year, bringing his real return down closer to 1% per year.

And since much of his investing has been in tax-deferred accounts, he has yet to pay taxes on that money.  Of course, he doesn’t know what the tax rates will be during his retirement, when he’s taking income from those accounts.

But what direction do you think tax rates will be going over the long term?  (If you said “down,” I’ve got a Rolex watch I’ll sell you for $20.)

When you account for inflation and taxes, the question that ought to hit you over the head is…

Was it worth it?!?

Was it worth all the roller-coaster ups and downs and the sleepless nights to get 4.5% per year before taxes and inflation?

As I pointed out in the podcast, Bank On Yourself can beat that with a stick.   And without the risk or volatility of traditional investments.

Keep in mind that no two Bank On Yourself plans are alike…

Each is custom tailored to your unique situation, goals and dreams. To find out what your bottom-line, guaranteed numbers and results would be if you added Bank On Yourself to your financial plan, request a free, no-obligation Analysis now, if you haven’t already done so.
REQUEST YOUR
FREE ANALYSIS!

If you’re wondering where you’ll find the money to fund your plan, keep in mind the Bank On Yourself Professionals are masters at helping people restructure their finances to free up seed money to fund a plan. Here are the eight most common places they look.

My critic’s experience wasn’t unique, although I’ll commend him for actually looking at his statements and then being willing to admit publicly – if anonymously – his disappointing results.

One subscriber to the Bank On Yourself blog made a similar discovery and posted this comment on last week’s blog:

Wow. I had the exact same experience when investigating Bank On Yourself before starting my own plans (have multiple policies and am LOVING the results – exactly as predicted or better, no surprises and I sleep well at night). I made the same Google search and spent hours poring over the posts. What struck me was that nobody ever presented any evidence of any kind of scam. Some folks disagreed with the assumptions or touted their wildly inaccurate assumptions about equities as a more attractive alternative, but never did anyone have anything remotely scam-ish to report.”

This comment came from Dan Proskauer, a very analytical man who has spent literally hundreds of hours researching Bank On Yourself, running spreadsheets and crunching the numbers.

He says the Bank On Yourself method looks better the more he studies it.  Dan revealed the conclusions of his research in an interview I did with him last year.  I’d encourage you to read or listen to it.

And this concise comment made last week by a subscriber named John really summed up what a lot of people are (finally) figuring out…

I LOVE my Bank On Yourself plan, it does everything I was promised and more. I’ve not borrowed a penny from a bank or credit card in over a year. Why should I? I lend it to myself! And if you want a scam, I have two words for you … Wall Street”

Now for the details of our NEW contest…

A comment was made on the same thread that debates the merits of Bank On Yourself that it essentially works the same as a savings account, but with the added advantage of having a death benefit.  This statement really got me thinking.

Enter-To-Win

While there certainly are some ways in which Bank On Yourself-type policies function like a savings account, I can think of a lot of major, critical differences.

But rather than me telling you what those differences are, I’d rather hear what you believe they are.  And some of our subscribers are a whole bunch smarter than I am.

Enter-To-Win

So, I’m holding another contest, and our team will pick the five best answers and award a top prize of an iPod Touch (a $229.00 value), a second prize of a $100 Amazon.com gift certificate, and three runner-up prizes that will give you a choice of a $25 dining gift certificate or a personally autographed copy of my best-selling book for you or to give to someone you care about.

Just answer the following question in the comments box below no later than midnight, Monday, October 3:

The contest question is:  How is dividend-paying whole life insurance different from a savings account (besides the death benefit)?

You can address one or more differences, or comment on someone else’s response to qualify.

And if you think I’m “full of it,” feel free to tell us that, too.  (Some of our subscribers don’t seem to need any encouragement to do that…)

We’ll circle back here next week to report on the contest results and winners.

To qualify, just type in your response in the comments box at the end of this post no later than midnight, Monday, October 3rd.  Please note that all comments are moderated, so there will be some delay before it appears.  (Sorry – open to U.S. residents only.)

And now for the winners of last week’s contest.  As I mentioned, we received hundreds of entries with the correct answer by both email and via the blog comments.  These five randomly chosen winners have all been notified by email:

$100 Amazon.com gift certificate – Sheri Browning

The four winners of the $25 dining gift certificate or autographed book – Jeannie Fisher, Kevin Caldwell, Lynne, and Rich Rhoads

Okay!  Scroll down to the comments box and enter the contest…

Is Bank On Yourself Legitimate Or A Scam?

If you’ve ever searched for Bank On Yourself on Google, you’ve probably come across a couple of websites containing threads where posters debate the merits of Bank On Yourself.Not a Scam

One such thread that comes up high in the search results has nearly 200 posts spanning the last year and a  half.

On this lively audio podcast, Bank On Yourself founder Pamela Yellen discusses how her toughest anonymous critic on that thread has slowly been coming around.

He now (grudgingly) admits that Pamela is right about many of the points he has been contesting.  And, when challenged by another poster about the actual returns people get in the stock market, he even dragged out 29 years of records of his own investing accounts, only to conclude that he is “just an average investor.”

To listen to this fast-paced, surprising interview, click on the play button below, or you can download the recording as an mp3 and listen to it on your own player or iPod now at:

Near the end of this 15-minute interview, you’ll also discover a fast and simple experiment you can try to determine if Bank On Yourself really is a scam… or if it’s the ultimate financial security blanket in both good times and bad.

TIRED OF WATCHING YOUR FINANCIAL PLAN GO NOWHERE?

Find out how the Bank On Yourself method can give you the financial security and predictability you want and deserve. It’s NEVER had a losing year in 160 years! Take the first step right now by requesting a FREE Bank On Yourself Analysis.

Wondering where you’ll find the funds to start a plan? Don’t worry! You’ll receive a referral to one of only 200 financial representatives in the country who have met the rigorous requirements to be a Bank On Yourself Professional and can show you ways to restructure your finances to free up seed money to fund your plan.
REQUEST YOUR
FREE ANALYSIS!

We really want to hear your comments and feedback!  Tell us what you think in the comments box below.  Please note that any comments containing the answer to the question of what was Pamela’s critics rate of return will be posted after September 24th, so as not to give away the answer…

Flight to Safety: What to Do With Your (Remaining) Money After Stock Market Delivers a Drubbing

Investors have short memories.

Keeping that in mind, you might want to print this column and save it at the ready. It is timely reading this week and without any doubt will be again — sooDamaged Nest Eggsner than any of us want to admit.

Along with death and taxes, one certainty in life is that the stock market will gyrate wildly, each time robbing investors of any remaining sense of financial well being.

When a stock market quake hits, stunned shareholders always get airborne, seeking a flight path to safety. In the immediate aftermath, my in-box overflows with queries from shell-shocked individuals searching for quality alternatives to the Wall Street temblors.

My answers are pretty much the same each and every time, although I must admit I remain puzzled why so many people who cry “foul” when Wall Street shakes, soon behave like “fowl” and — despite their badly damaged nest eggs — wing their way back to their 401(k)s and other Wall Street roosts, often within weeks or months.

So, fully aware that I will likely be pressed into writing some variation of this column again in the not-too-distant future, I present three of the questions I’m asked most frequently and my replies:

1. Is Now the Right Time to Shift into Gold?

[Read more…] “Flight to Safety: What to Do With Your (Remaining) Money After Stock Market Delivers a Drubbing”

AAII vs. Bank On Yourself: Total Knockout in Round One

Last week, I posted the rebuttal I wrote to the American Association of Individual Investors (AAII) review of my best-selling book, which declared the concept “too good to be true.”BOY Boxing Gloves

Since AAII said they would not publish my response or correction of the misinformation contained in their review, I told them I would publish it here and let YOU be the judge of whether AAII was twisting and omitting things… or being fair and unbiased.

The response was swift, surprising and universal.  There were so many insightful comments made that I couldn’t pick only three to award prizes to, as was my original plan.

So I picked ten (the winners are listed at the end of this post – check to see if your comment was one that was chosen).  And I’ve excerpted from a number of the comments here, so I can share some of the highlights with you.

Jeffrey summarized the thinking of many commenters about AAII this way:

AAII naturally committed the typical strategic blunders essential to the charade proposed by the investment industry (Wall Street) and financial professionals (a.k.a. traders, gamblers, speculators, etc.). Any attempt to allow people an opportunity to truly grow wealth, reduce risk, and prepare for a more stable environment challenges the status quo of buy and lose (commonly referred to as buy and hold) and then industry pundits (AAII) start the negative attacks in order to establish fear of finances and preserve their base of profits. AAII omitted important aspects of your plan, distorted facts of your plan to promote obfuscation, and blatantly twisted all aspects of your plan in order to destroy your credibility.

Thank you for presenting people with an opportunity to actually prepare, plan, and realize a better financial picture.”

[Read more…] “AAII vs. Bank On Yourself: Total Knockout in Round One”

The “unrealized loss” riddle

Note: this post has been updated in November 2011

-$62,734.06. That’s the “unrealized” loss we’ve had in one of the mutual funds in our retirement account, according to the statement we just received.

A $62,734.06 unrealized loss.

I keep staring at the statement, hoping that number will somehow magically turn positive.  After all, we’ve had a nice run-up in the stock market recently, and that mutual fund has one of the best long-term track records of any fund.

What the heck is an unrealized loss, anyway?

I realize I’ve lost a whole bunch of money.  And I remember working my butt off to make that money!”

A $62,734 “unrealized loss.”  Is that an oxymoron, like “Great Depression,” “small fortune,” “accurate forecast” and “quickly reboot”?

OXYMORON defined
OXYMORON defined

I dunno if it qualifies as an oxymoron.  But I do know it’s moronic that we pin our hopes and plans for financial and retirement security on things we can’t predict or count on!

My husband Larry is 61 and theoretically four years away from retirement.  He probably won’t retire when he’s 65 because he says he’d get bored.  But if we were relying on the conventional wisdom about saving for retirement, it wouldn’t even be an option for him.

Did you know that 40% of retirees were forced to retire sooner than planned, due to health problems, job layoffs and other factors beyond their control?

Of course, none of us want to think that could happen to us… but what would you do if it did?

Another mutual fund in our retirement account shows an $8,012.16 “unrealized” gain.

And there lies the rub:  You don’t actually lock in a gain or loss until you sell an investment.

(November 22, 2011 Update:   Our most recent retirement account statement shows our “unrealized loss” is virtually unchanged since I wrote this blog post almost a year ago.  And looking at the Dow’s ups and downs over the past year makes a day on the roller coasters at Six Flags look tame.)

Oxymoron cloud
Oxymoron cloud

Unfortunately, studies and history show that most of us are far more successful at locking in our losses than our gains.

Can you tell me what your retirement account will be worth on the day you plan to tap into it?  (Not what you hope it will be.)  If your answer is “no,” how can you even call it a plan? And what will you do if the market plunges by 50% – againright before you planned to retire?

[Read more…] “The “unrealized loss” riddle”